Problem: Imagine if you had a local retail business-a grocery, clothing, book, music, or appliance store-and answer the following questions:
1) What is the physical flow of merchandise into the store, and what documents are used in connection with this flow?
2) What documents are prepared when merchandise is sold?
3) Does the store keep perpetual inventory records? If so, does it keep the records in units only, or does it keep track of cost as well? If not, what system does the store use?
4) How often does the company take a physical inventory?
5) How are financial statements generated for the store?
6) What method does the company use to cost its inventory for financial statements?